Financial Impact of the real "Silicon Shortage"

Since the "silicon shortage" began two years ago in the solar industry, it had the following financial impact:

- Silicon refiners made more money as the industry grew
- Solar module manufacturers raised their prices and made more money as the industry grew
- Designers/Integrators (like Akeena Solar, etc.) made more money as the industry grew
- Customers (business and commercial) purchased more solar because their electric rates and environmental concerns escalated
- Incentives in key states (CA and NJ) were reduced (generating more installed kw per dollar of incentive) as the industry grew

Everyone has benefitted throughout the value chain.  Yes, customers paid a bit more....and I would rather see prices declining rather than staying the same or even increasing.  But it is a misconception that this shortage was entirely a bad thing.

Nevertheless, I'm looking forward to the day when prices throughout the value chain begin to decline again.

Comments

[billygoat]

Hmmmm.... I always appreciate your comments. However, on this one, I think you've got the cart(s) ahead of the horse.

You go down the list of how more $ was made down the chain because everyone was charging more due to higher silicon prices. You also include customers in this beneficiary list. Without even going into a discussion on gross revenue vs. net profit, let me focus on customers.

"- Customers (business and commercial) purchased more solar because their electric rates and environmental concerns escalated"

Yes! But what does this have to do with higher silicon prices due to "shortages"? People weren't buying because silicon was going up in price... they were buying for the reasons you state. Or, even more specifically, people are buying to move away from pain (high energy costs, TRUE cost of our hydrocarbon addiction, ecosphere impacts, UNsustainability of our current ways, etc) and towards pleasure (save $, save the biosphere [we can't really "save" the planet; it will still be here long after we are, so everybody please just stop it - that's a whole rant for another time], make a geopolitical difference, peer recognition & approval, early adopter and social standing, etc.)

People perceive there is a problem (or, more to the point, THEY have a problem) and are reaching for a solution.

That is why they are buying... and why the rest of the chain is even allowed to exist.

Higher prices are NOT benefiting the participants, save for a few at the head of the production chain - those that own the raw commodity.